Question

Effect of Luxury Tax on Consumption

Government economists of a developing country determined that the purchase of imported perfume is related to a proposed "luxury tax" by the following formula where N(x) measures the percentage of normal consumption of perfume when a "luxury tax" of x% is imposed on it.

N(x) =

10,000 − 40x − 0.02x2

      (0 ≤ x ≤ 200)

Find the rate of change of N(x) for taxes of 45%, 100%, and 130%. (Round your answers to three decimal places.)

1.45% tax consumption/percentage increase in tax

2. 100% tax consumption/percentage increase in tax

3.130% tax consumption/percentage increase in tax

Answer 1